Deal includes new Disney films and lots of back catalog.

If you’re a Netflix subscriber and you have kids, you’re about to make those kids happier. Netflix and Disney just inked a new deal, making the former the exclusive American subscription TV service for “first-run live-action and animated feature films from The Walt Disney Studios.”

This marks the first time that a major Hollywood studio has decided to side with a digital distribution rather than a traditional TV provider. The deal is also a high-water mark for a company that some were speculating was ripe for takeover as recently as last month.

In a press release, Netflix said that beginning in 2016, theatrically released films from Disney, Pixar, Marvel, and all other Disney subsidiaries (presumably including the newly acquired Lucasfilm) will be available to subscribers on all of its platforms. The deal's value was not disclosed, but it will include direct-to-video new releases and some of Disney’s back catalog (that will be available as early 2013).

“These movies, if you’ve got young kids—[now] you’ve got to have Netflix,” Colin Dixon, an analyst with TDG Research, told Ars. “I think it’s a really important deal. I’m surprised. I did not think that Disney was ready to do this yet. It’s a pretty big surprise. I think it really legitimizes Netflix as a provider of premier content now.”

The slow decline of pay TV

Analysts pointed out that historically, Disney has tightly managed the video (and later, DVD) release of its back catalog. The company would make movies available for a short period of time before withdrawing them for a number of years, only to re-release them later to great fanfare.

“Disney is really careful, really disciplined about the value of those deals,” Dan Cryan, an analyst with IHS, told Ars. “The fact that they have chosen to go with Netflix is interesting both in terms of how much money Netflix is prepared [to put] on the table and how much money Starz is not prepared to put on the table.”

Starz currently has a deal to distribute Disney films on TV until 2016. After that, it will only have access to Sony Pictures content. (Starz also famously split from Netflix earlier this year.) In the wake of the deal, Starz’ parent company, Liberty Media, dropped five percent on Wall Street. Netflix rallied 14 percent, its largest single-day gain.

While on its face, this may seem like the latest step in the march toward the death of pay TV, some analysts say the status quo will remain.

“The pay TV business as we know it is on really safe grounds until sports distribution changes,” Cryan added. “It’s technically difficult to distribute that stuff online at scale. In addition to that, the business is stacked up so you pay a lot for ESPN and other sports channels not available elsewhere. Until that changes, the core of the pay TV business is on relatively safe ground.”

Depending on how this is handled, this is some very good news for Netflix, which has made some rather boneheaded decisions in the recent past. It will be great for people to queue up The Sword in the Stone when they're bored, but hopefully Netflix doesn't decide to distribute Disney across multiple online distribution tiers. Messages such as "Brave is currently only available on Netflix Platinum" would be very annoying.

Now if only Netflix would get their act together and actually show us a list of newest shows/movies available. You can subscribe to their RSS, but whatever is listed on the RSS takes weeks if not months to actually show up on netflix itself.

Than you have Netflix making most of their library as DVD only ...... Another retarded move.

This might sink Disney.

What are you talking about? Their new items RSS feed goes out when the content is added. I add movies all the time from the feed items, usually the same day.

As for DVD's, they already have a large collection of them, and it's far easier to buy DVDs, than it is to negotiate for streaming licenses. I'd say that they do a good job, and are getting better selections. This deal may lead to more content from other owners being available.

Depending on how this is handled, this is some very good news for Netflix, which has made some rather boneheaded decisions in the recent past. It will be great for people to queue up The Sword in the Stone when they're bored, but hopefully Netflix doesn't decide to distribute Disney across multiple online distribution tiers. Messages such as "Brave is currently only available on Netflix Platinum" would be very annoying.

Interesting. I figured if Disney was going to go exclusive with anybody, it would have been Apple/iTunes. Not merely because exclusive access to Disney content would have been one of the huge draws that Apple needs to make their "hobby" something more than that, and not only because Apple has the cash to make sure nobody else could get Disney's content in a bidding war, but also because of the historical ties between Disney and Apple.

What will happen in the UK where BSkyB has exclusive rights to disney? Netflix have lost most content in the UK after BSkyB "won" rights to most new content. Netflix cost is £6 a month, the similar package on sky is £40 a month!!!

Exclusive deals harm the consumer in the end. If Netflix has to pay 3$ a film then you can be sure they will look to recover 5$ a film if not more. I am sure costings will never get released, but regardless of where these exclusive deals take place, they are all horrible for the consumer!

The worst complaint I've got with Netflix is my Recommended For You is full of pink ponies and fairies. The upside is my daughter likes all superhero cartoons. It's a great way for kids to learn important popculture references -- I'm pretty sure my 3 year old knows the real name of every super hero.

Non-USA people: you can get US Netflix without too much hassle if you put your googlefoo to it.

Depending on how this is handled, this is some very good news for Netflix, which has made some rather boneheaded decisions in the recent past. It will be great for people to queue up The Sword in the Stone when they're bored, but hopefully Netflix doesn't decide to distribute Disney across multiple online distribution tiers. Messages such as "Brave is currently only available on Netflix Platinum" would be very annoying.

Do you even use Netflix? They have Streaming and DVD. There are no levels or tiers.

Depending on how this is handled, this is some very good news for Netflix, which has made some rather boneheaded decisions in the recent past. It will be great for people to queue up The Sword in the Stone when they're bored, but hopefully Netflix doesn't decide to distribute Disney across multiple online distribution tiers. Messages such as "Brave is currently only available on Netflix Platinum" would be very annoying.

Do you even use Netflix? They have Streaming and DVD. There are no levels or tiers.

Depending on how this is handled, this is some very good news for Netflix, which has made some rather boneheaded decisions in the recent past. It will be great for people to queue up The Sword in the Stone when they're bored, but hopefully Netflix doesn't decide to distribute Disney across multiple online distribution tiers. Messages such as "Brave is currently only available on Netflix Platinum" would be very annoying.

Do you even use Netflix? They have Streaming and DVD. There are no levels or tiers.

Now if only Netflix would get their act together and actually show us a list of newest shows/movies available. You can subscribe to their RSS, but whatever is listed on the RSS takes weeks if not months to actually show up on netflix itself.

Than you have Netflix making most of their library as DVD only ...... Another retarded move.

This might sink Disney.

Wouldn't you suppose the studios are the ones not allowing streaming? If Netflix were allowed to stream new, first-run flicks en masse, don't you suppose they *would*? Heck of a lot cheaper than maintaining a physical-media process. They could charge more and bury pay TV (at least for non-sports content).

Sink Disney? Seriously? That assumes Netflix is in control here. Disney? Relinquish control? The tail doesn't wag the dog. Not with the Mouse.

The worst complaint I've got with Netflix is my Recommended For You is full of pink ponies and fairies....

Funny, I'm always more worried about my Recommendeds making it to them.

Some sort of multiuser support would be nice.

More to the point, despite my issues with copyright regarding Disney, I'm happy to hear they're going with digital distribution as I could care less about sports so let the sports fans support the old Networks.

Now if only Netflix would get their act together and actually show us a list of newest shows/movies available. You can subscribe to their RSS, but whatever is listed on the RSS takes weeks if not months to actually show up on netflix itself.

Than you have Netflix making most of their library as DVD only ...... Another retarded move.

This might sink Disney.

Wouldn't you suppose the studios are the ones not allowing streaming? If Netflix were allowed to stream new, first-run flicks en masse, don't you suppose they *would*? Heck of a lot cheaper than maintaining a physical-media process. They could charge more and bury pay TV (at least for non-sports content).

Sink Disney? Seriously? That assumes Netflix is in control here. Disney? Relinquish control? The tail doesn't wag the dog. Not with the Mouse.

This. Netflix has to do two different kinds of deals for DVDs and streaming. they don't have to ask permission to rent DVDs, which means the DVD library is always going to be larger than streaming, which they have to negotiate for.

The worst complaint I've got with Netflix is my Recommended For You is full of pink ponies and fairies. The upside is my daughter likes all superhero cartoons. It's a great way for kids to learn important popculture references -- I'm pretty sure my 3 year old knows the real name of every super hero.

Non-USA people: you can get US Netflix without too much hassle if you put your googlefoo to it.

No, you can't, if you have a non-US form of payment...as nearly all non-US users would. Netflix isn't stupid. As an ex-pat, I've tried this through multiple VPN services -- HideMyAss, unblockus, etc. Netflix always gets you when you enter that credit card number with an invalid post code. Even if you use a non-US Paypal account, they say talk to the hand.

Hope they re-release out-of-print titles like "Scarecrow of Romney Marsh." Stupid thing costs literally hundreds of dollars on Amazon... for VHS!!! My wife & I both remember watching that one as young children and having the crap scared out of us. Love to watch it again, especially if they can remaster it.

I'm a bit surprised Apple or Amazon couldn't have swung this deal. Sucks for those two.

Yeah. Didn't even think of it that way until you mentioned it. The more I think of it, the less I like the idea of Netflix being the only digital distribution source. I already don't like seeing titles that are Amazon exclusives that I can't get through iBooks.

half wonder if this is disney's opening move in the game to acquire netflix.

That's entirely plausible. Not sure if that's a good thing or a bad thing though; I was kind of hoping Netflix would help push congress to reduce copyright terms, so that they could stream all sorts of stuff that they have trouble getting their mitts on right now.

Honestly though what I really want to see is a Steam for movies. Disney COULD do this... it wouldn't be Steam per se (have it so you can invite up to 4 people to watch with you who don't own the movie/show, for instance, possibly they have to be on your friends list to help discourage random streamers of everything all the time) but it would be insanely profitable. At least, potentially.

Seems odd, as Netflix isn't available in any part of the world's biggest market - Asia.

Makes a lot of sense, really. Netflix has expanding with language and content. They went with mostly English then aimed at Spanish markets, where content is similar (yes, different language, but a lot of US shows are popular in Latin America and Spanish is popular in the US). But Asia is a different beast, entirely different content, a history of people not paying for content (or competing with low cost DVDs), very localised content with very local languages. Because lets face it, you're not going to launch Netflix India at a billion people, you're going to launch it at the upper 10m with decent 4G access. Plus the Chinese market is uniquely difficult to break into, so many IT companies have failed, considering that Netflix is hardly the most profitable company around they are right to be wary before pushing in.

The value Disney has in ESPN is tremendous. I believe ESPN is valued at more than all the other networks put together.

Sports is the only reason to have Pay TV, and is unlikely to be replaced by the Internet anytime soon. The reason is that (1) you don't benefit from the internet's ability to watch at your desired time, because most people want to watch it live (2) people love watching sports in the highest quality possible (the other format for this is movies, which is why movie theaters continue to increase sales, despite remarkable price increases).

Additionally, ESPN, through ESPN3 and WatchESPN has brilliantly managed to make online access to sports an extremely profitable venture for themselves (they have cable operators pay them to carry the online networks).

Outside of Sports, pay TV will die a rapid death within the next 5 years, I'd imagine.

The value Disney has in ESPN is tremendous. I believe ESPN is valued at more than all the other networks put together.

Sports is the only reason to have Pay TV, and is unlikely to be replaced by the Internet anytime soon. The reason is that (1) you don't benefit from the internet's ability to watch at your desired time, because most people want to watch it live (2) people love watching sports in the highest quality possible (the other format for this is movies, which is why movie theaters continue to increase sales, despite remarkable price increases).

Additionally, ESPN, through ESPN3 and WatchESPN has brilliantly managed to make online access to sports an extremely profitable venture for themselves (they have cable operators pay them to carry the online networks).

Outside of Sports, pay TV will die a rapid death within the next 5 years, I'd imagine.

I'm not sure America has the infrastructure to keep up with the demand. FiOS stopped expanding years ago, and Google Fiber is still in showcase mode.